AME Church faces $90M class-action lawsuit related to retiree pension fund
Earlier this year, the AMC Church halted pension payouts to its thousands of retired pastors, bishops and others.
The African Methodist Episcopal Church is the target of a class-action lawsuit filed on March 22 by as many as 5000 eligible beneficiaries of its pension fund that has lost at least $90 million due to irresponsible investments, according to the suit.
The Charleston Post and Courier is reporting that the Mother Emmanuel AME Church in Nashville, Tennessee is being sued by active and retired bishops and others who are worried that their pension are no longer coming since they had been halted by the church earlier this year.
Church officials are looking for ways reinstate payments, even partially, as the financial disaster has left thousands of retirees in limbo.
The lawsuit is filed on behalf of retired Presiding Elder Cedric Alexander of Maryland who is lead plaintiff as well as all eligible persons unless they explicitly opt out. The suit is prepared by the firm Kantor & Kantor of California in collaboration with the AARP Foundation and was filed in U.S. District Court in Maryland.
The defendants in the lawsuit include Jerome V. Harris, the former executive director of the church’s Department of Retirement Services, and South Carolina Bishop Samuel L. Green, the former chairman of Retirement Services’ board of trustees, according to the report, as well as the church’s council of bishops and general board, both of which oversee AME Church administrative functions.
Harris reportedly emptied his office and absconded prior to a general board meeting at the end of January, where church staffers revealed over $90 million had gone missing from Symetra annuity investments, a pension account that had a value of almost $127 million just seven months prior. Harris, they shared, was the sole person who knew details about the pension account.
Further investigation uncovered that tens of millions of dollars from the Symetra account had been allocated to several risky investments funds including transfers to Motorskill Ventures Group and the Financial Freedom Fund , plus into a reportedly problematic land deal in Key Marco Island, Florida.
Harris had a prior suit in July 2006 dismissed on technicalities where he was accused of mismanagement of annuity funds.
On October 7, the AME reported to church members “a material loss in the value of one or more of its departmental investments.” The message, from the office of Dr. Jeffrey Cooper, the AME general secretary, was released as a statement from the church’s Council of Bishops.
“A comprehensive audit and review of the Department, the subject investments and the fiduciaries overseeing the retirement funds and other accounts is underway,” says the statement. “The review is being conducted by an independent law firm and accounting firm. A report with detailed findings has been requested and will be made available publicly upon its receipt.”
“The Department has advised that all life insurance coverage provided to participants has not been affected by the value of the departmental investments, which are outside the life insurance program,” it continued. “As a result, life insurance beneficiaries will receive the full value of any valid policy claim.”
The Post and Courier report adds that The Wall Street Journal published an in-depth report in March this year about the suspension of payments by the AME Church. The outlet initiated an investigation that included federal authorities. In its revelation, the newspaper said the church warned of “a possible financial crime.”
Rev. Dr. Jeffery B. Cooper issued a statement from the Department of Retirement Services following the WSJ report sharing the “devastating news that the AME Church … may have been the victim of a financial crime.” His message added few new details but assured the flock that the remaining funds, and new funds coming in, were in an account safe from harm.
“What we’re seeking is full restoration of the retirement fund, plus enrolling anyone who should have been enrolled,” Dara Smith, a senior attorney for the AARP Foundation, told The Post and Courier. “We just want to make people whole. … The goal here is just to get people what they were promised.”
The class-action lawsuit — which was filed on March 22 — will now have be certified by a federal court to continue. At which time it will move into the notification process giving all interested parties time to respond and opt-out should they choose.
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